Spain's Prime Minister Mariano Rajoy on Tuesday all but ruled out seeking a bailout in 2012 but vowed to do so if faced with persistent, high borrowing costs.
Rajoy has kept world markets on edge as he ponders whether the eurozone's fourth biggest economy will seek a rescue, in which the European Central Bank would buy Spanish bonds to drive down Madrid's financing costs.
But the conservative prime minister gave the clearest sign yet that he sees no reason to trigger a bailout this year.
Spain has nearly completed the bond issues required to finance the government's operations throughout 2012, he said.
"For now we have covered practically the entirety of our issues through this year," Rajoy said.
By October 23, Spain had raised a gross 85.9 billion euros ($US110 billion) in medium- and long-term bond sales -- equal to 95.1 per cent of its 2012 target.
Spain's total gross financing needs for this year amount to 186 billion euros, a goal that rises to 207 billion euros next year.
Spain may yet be forced to seek external assistance, however, Rajoy conceded.
"If we see that during a long period Spain is financing itself at very high prices then we would have to ask for it," he said.
But the crucial question, the Spanish leader said, would be whether any European Central Bank intervention significantly curbs the country's borrowing costs.
Spanish borrowing costs have already tumbled since the ECB outlined plans in September to buy an unlimited amount of stricken states' bonds if they submit to strict eurozone conditions first.
Spanish 10-year bond yields, which spiked at a dangerous level of more than 7.0 per cent in the mid-summer, were hovering early afternoon at an elevated but much lower level of nearly 5.7 per cent.
Investors were demanding an extra return -- also known as a risk premium -- of 424 basis points (4.24 per centage points) on Spanish bonds when compared to equivalent, safe-haven German debt.
Rajoy said key question for Spain before it seeks assistance is whether ECB action would bring down the risk premium to 200 basis points or leave it at about 400 basis points.
The Spanish leader said his bailout decision would depend entirely on whether it was in the general interest of his country.
"It is a path that is open. I don't renounce using it if it is in the interests of Spain. For the moment we have not decided to adopt it but it is a possibility that we have open."
Rajoy, who performed a U-turn on his pre-election promises by pushing up sales taxes to curb the public deficit, said he hopes to cut taxes in 2014 when the government anticipates a return to economic growth.
The prime minister attacked a pro-independence drive in Catalonia, whose president Artur Mas has called snap elections for November 25 to win a mandate for a referendum on "self determination".
"The approach that is being taken here goes against history, goes against the sign of the times, and goes against simple common sense," the prime minister said.
Rajoy's Popular Party government has vowed to stop any such vote, insisting that it would breach the constitution, and decrying Mas's manoeuvre as a divisive step in a time of economic crisis.
Catalonia, fiercely proud of its distinctive language and culture, feels it gets a raw deal from Madrid, which levies far more taxes from the region than it returns through spending.
At the same time, the region has been forced to slash spending on education and health so as to help curb the public deficit.